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European Central Bank members voice concern over its negative rate policy
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Loading...Two members of the European Central Bank (ECB) have expressed concern at its current negative rate policy, fearing “unintended consequences” it could have on the region’s financial system.
Italian central bank chief and ECB member Ignazio Visco, considered a dove that backed President Mario Draghi’s recent policy announcements, told that negative interest rates were the standout “unconventional” policy that had been implemented by the euro zone’s central bank.
“I’m concerned. I’m concerned of unintended consequences,” he told at the IMF and World Bank annual meetings in Washington, D.C.
“We have done a lot of analysis. At the end, we concluded that the package that we put together would be beneficial and even the elements of the package taken one-by-one would have a positive effect up to a point. And I think we are very close to that point. I don’t want to pass that point and then end up in a trap of negative interest rates.”
Meanwhile, Robert Holzmann, ECB member and the current governor of Austria’s central bank, told that negative interest rates are “not a very good idea economically and socially.”
Holzmann, seen as hawk at the central bank who rallied against the recent package, has called for the ECB to reduce its inflation target to thereby decrease the need for unconventional policy instruments. A relatively new member to the board, he told: “I decided to be outspoken and to change the atmosphere and tone in which the discussion has taken place so far.”
Source: CNBC
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